X filed a lawsuit on Tuesday against the Global Alliance for Responsible Media, a coalition of major advertisers, claiming that it had violated antitrust laws by coordinating with brands to dissuade them from spending money on the social media platform.
The suit, filed in federal court in Texas, claims that the coalition, known as GARM, “conspired” with leading brands, including CVS, Unilever, Mars and the Danish energy company Orsted, to “collectively withhold billions of dollars in advertising revenue” that were owed to X, then known as Twitter, in the wake of Elon Musk’s takeover of the social media company in 2022.
“The illegal behavior of these organizations and their executives cost X billions of dollars,” wrote Linda Yaccarino, X’s chief executive, in an open letter to advertisers. “People are hurt when the marketplace of ideas is undermined and some viewpoints are not funded over others as part of an illegal boycott.”
With the lawsuit, X effectively declared war on advertisers, which provide the bulk of the social media company’s revenue. Since Mr. Musk acquired the company and promised to usher in a new era of unfettered free speech, many advertisers have limited their spending on X, concerned by reports of rising hate speech and misinformation there. By pursuing legal action against GARM, Mr. Musk continued to break with the leaders of other social media companies, who have forged close relationships with advertisers and been responsive to their concerns about offensive online content.
“We tried being nice for 2 years and got nothing but empty words,” Mr. Musk wrote Tuesday in a post on X. “Now, it is war.” He added in a separate post that he encouraged any company that faced a boycott to file a lawsuit.
“To the extent that Elon hadn’t already burned all bridges and ties with the entire advertising community, I don’t see how this will get any advertisers to come back to X,” said Ruben Schreurs, the chief strategy officer at Ebiquity, a marketing and media consulting firm. “It’s a last-ditch effort to force brands who don’t want to be in the cross hairs of this kind of legal action to return to the platform.”
GARM, which represents major brands that are responsible for more than 90 percent of global advertising spending, encouraged advertisers to avoid X after Mr. Musk bought it. In the wake of the takeover, 18 GARM members stopped advertising on the platform altogether, according to the lawsuit. Dozens of others reduced their spending by 70 percent or more, the filing said.
The effects on X’s revenue have been severe. In the second quarter of this year, X earned $114 million in revenue in the United States, a 25 percent decline from the first quarter and a 53 percent decline from the same period the previous year, according to internal documents obtained by The New York Times. The company aims to reach $190 million in U.S. revenue during the third quarter, bolstered by advertising associated with the Olympics, football and political campaigns, the documents said — but that target would still set X’s quarterly earnings at 25 percent less than they were last year.
Because of reduced advertiser spending, X was forced to drop the price of its ads, the lawsuit said. But even though its ads were inexpensive compared with other social media platforms, advertisers did not come back.
In the lawsuit, X argued that advertisers’ refusal to return was anticompetitive. “By refraining from purchasing advertising from X, boycotting advertisers are forgoing a valuable opportunity to purchase low-priced advertising inventory on a platform with brand safety that meets or exceeds industry standards,” the lawsuit said.
Several major brands left X or reduced their spending there after Mr. Musk restored hundreds of banned accounts and researchers documented a surge in hate speech and misinformation on the platform. To advertisers, the accusations in the lawsuit sound “so far-fetched and frankly ridiculous,” Mr. Schreurs said.
After Mr. Musk’s takeover, the company allowed its membership in GARM to lapse, but X recommitted to the coalition in July. “X is committed to the safety of our global town square and proud to be part of the GARM community,” the company said in a statement that month.
In July, the House Judiciary Committee, led by Representative Jim Jordan, a Republican of Ohio, released a report that said GARM had attempted to influence the kinds of content that appear online by “starving disfavored content, or even entire platforms, of advertising dollars needed to survive.” And last week, the committee expanded its inquiry into GARM’s activities, sending letters to more than 40 member companies that asked them to preserve documents and answer questions about their relationship with the group.
GARM did not immediately respond to a request for comment. Representatives for CVS, Unilever, Mars and Orsted also did not immediately respond to requests for comment.
Rumble, a right-leaning video platform, also filed a lawsuit on Tuesday against GARM and several advertising agencies that had recommended their clients refrain from advertising on the service. “The brand safety standards set by advertisers and their ad agencies should succeed or fail in the marketplace on their own merits and not through the coercive exercise of market power,” Rumble said in its complaint.
Mr. Musk has long had a tempestuous relationship with X’s advertisers. Last year at The New York Times DealBook Summit, he accused advertisers of trying to “blackmail” him by pulling their advertising from X after he endorsed an antisemitic conspiracy theory online. Mr. Musk told brands, “Don’t advertise,” and used an expletive several times to emphasize his point.
Mr. Musk singled out Bob Iger, the chief executive of Disney, which was a major advertiser on X at the time. Mr. Iger had said that the company’s association with “Elon Musk and X was not necessarily a positive one for us.”
In June, Mr. Musk appeared onstage at Cannes Lions, an advertising festival, to say his comments at the DealBook conference had not been addressed to “advertisers as a whole” but just to those who attempted to interfere with what is allowed on X.
“Advertisers have a right to appear next to content they find compatible with their brands,” Mr. Musk said. “What is not cool is insisting that there can be no content that they disagree with on the platform.”
Mr. Musk has made a habit of taking legal action against X’s critics, particularly when their critique hurts the company’s revenue. Last year, X sued the Center for Countering Digital Hate, or C.C.D.H., which documented a rise of hate speech on the social media platform after Mr. Musk’s takeover. X also sued Media Matters, an advocacy organization, in November, after it published research showing that ads on X appeared next to antisemitic content.
A federal judge dismissed the case against C.C.D.H. in March, ruling that the lawsuit was an attempt to penalize the group for speaking negatively about the company, and that its work was protected under the law. X is appealing the decision. A trial in the Media Matters case is set for 2025.
Mr. Musk has also used the courts to stymie his competitors. Earlier this week, Mr. Musk revived a lawsuit against OpenAI, the maker of the A.I. chatbot ChatGPT, claiming that the company and two of its founders breached its founding contract by putting commercial interests ahead of the public good. Mr. Musk is the owner of xAI, which makes a competing chatbot called Grok.
